"We'll be offering the best, the safest and the cleanest cars in the world," said Günter Verheugen, the European commissioner for industry. Stavros Dimas, the environment commissioner, said: "This is the most ambitious target anywhere in the world, but it's reasonable and realistic."

The plan was denounced by environmentalists as too little too late and appeasement of the industry, particularly Germany, whose government and luxury carmakers have been fiercely critical.

While the commission was attacked by environmentalists, it can also expect a bruising battle with the car lobby in the attempt to turn the blueprint into binding legislation.

Porsche, the German luxury carmaker, recently called it a "war" in the European car industry waged by French and Italian makers of smaller cars against Germany, while the carmakers' association says the rules would put some €4,000 (£2,650) on the price of a new car and see thousands of jobs exported from Europe.

Mr Dimas and Mr Verheugen have been locked in a battle for weeks amid frenzied behind-the-scenes activity in Brussels over the scheme, with the environment commissioner arguing for deeper cuts to 120gpk per car and his industry counterpart contending that any such law would decimate the German car industry, lead the car giants to move out of Europe and cost the continent hundreds of thousands of jobs.

The compromise presented yesterday set a limit of 130gpk for new cars on average, with a further reduction of 10gpk to come from greater use of biofuels and other factors in the transport sector. The commission blames cars for 12% of Europe's greenhouse gas output.

A European summit next month is to focus on energy policy and climate change amid rising public concern and grave warnings of global warming catastrophe.

In the past few weeks the EU has announced plans to cut 20% from Europe's greenhouse emissions by 2020 and push for worldwide agreement on a 30% cut, while risking confrontation with the oil industry by raising targets for the mandatory use of biofuels in cars.

There is criticism that the cap on car emissions does not go far enough. "The commission has failed in its crucial first test" following last week's report on global warming in Paris from an intergovernmental panel of scientists, said Chris Davies, a liberal democrat MEP.

Friends of the Earth's transport campaigner, Tony Bosworth, said: "The EU has caved in to pressure from the motor industry and watered down its target for cutting carbon dioxide emissions from new cars.

"However, we are delighted that the EU recognises that legislation is required to make car manufacturers play their part in reducing the climate impact of their vehicles."

Yesterday's proposals are to be turned into draft legislation by early next year and need to be endorsed by the EU's 27 member states and the European parliament before becoming law, perhaps in 2009.

Voluntary agreements have been in place for a decade committing the car corporations to reducing carbon dioxide emissions.

But average car emissions in Europe remain stubbornly high at more than 160gpk. Emissions in Britain were measured at 167gpk last year.

The EU commission chief, José Manuel Barroso, has boasted that Europe is leading a "new post-industrial revolution" aimed at establishing the world's first advanced low-carbon economy.